United Continental (UAL 61.10, -1.33, -2.1%) is presenting at the Cowen Global Transportation Conference and what it is presenting isn't good news. Like others in the airline industry, United Continental is slashing its third quarter outlook for pre-tax margin and passenger unit revenue growth.
This update from United Continental came this morning and it followed hot on the heels of third quarter warnings issued yesterday by Delta Air Lines (DAL 44.72, -1.12, -2.4%), Spirit Airlines (SAVE 30.62, -1.89, -5.8%), and JetBlue Airways (JBLU 18.27, -0.89, -4.6%), the latter of which was issued after the close of trading.
In the case of United Continental, its third quarter operating challenges were compounded by Hurricane Harvey, which forced the suspension of operations for four days at Houston's George Bush Intercontinental Airport -- the airline's second-largest hub.
Other challenges cited by the airline included geopolitical tensions in the Korean Peninsula, pricing issues, and higher fuel costs.
The sum total of these challenges have led United Continental to revise its third quarter pre-tax margin guidance from 12.5% to 14.5% to 8.0% to 10.0%. Passenger revenue per available seat mile is anticipated to decline between 3.0% and 5.0% versus the airline's prior guidance for a decline of 1.0% to an increase of 1.0%.
The Harvey impact had an adverse impact of approximately 1.5 percentage points on unit revenue guidance while the remainder was blamed on uncompetitive basic economy pricing (~1 percentage point), ultra low-cost carrier pricing (~1 percentage point), and incremental Pacific weakness (~0.5 percentage points).
United Continental said it feels good about its progress despite the near-term challenges and that it is planning a quantitative update on its strategic initiatives in November.
For now, though, the quantitative update it provided for its third quarter outlook has clipped the wings of its stock, which is down 16% year-to-date.